Public policies can be tailored to significantly reduce construction costs. Uniform, broadband-friendly right of way and permit procedures eliminate a huge source of uncertainty for business planners. The more certain they are of their estimates, the more likely they are to invest.

   In the long run, it might not seem like much,
   but even a little guaranteed anchor revenue
   can make a huge upfront differenceOffering public facilities, for example vertical assets or space for nodes, on a co-investment basis and pre-installing empty conduit whenever roads are built or trenches are opened will also lower the hurdle for network builds. Of course, standard economic development tools such as sales tax concessions, community development funds and local seed capital work for broadband too.

Reducing the capital cost in a given locality improves its competitive position versus other regions by broadening the pool of potential service providers and increasing their return on investment. It also makes it easier for projects to qualify for assistance from the likes of the California Advanced Services Fund and the federal Rural Utilities Service.

Reducing capital costs isn’t always the answer, though. There are tradeoffs between capital and operating expenses. For example, it’s cheaper to hang fiber on poles than bury it, but the ongoing costs are higher. Capitalizing leases for node locations and vertical assets reduce operating expenses while raising capital costs.

Another way to reduce operating costs is for local agencies to partner with service providers on items like bulk Internet access and maintenance. One big wholesale bandwidth purchase will usually be cheaper than two medium size contracts. Local agencies might be able to set up agreements for joint pole maintenance or trenching. There’s a long list of possibilities worth discussing with prospective broadband system operators.

Documenting demand and leveraging public sector IT and telecoms budgets will brighten revenue prospects. The cost of an investment-grade demand study ranges into the low six figures for a local or regional-scale project. A service provider will spend that money on localities it already finds attractive, leaving local organizations to fund research for the area they represent.

A local agency can be an anchor tenant for a new broadband system, particularly when it can suggest ways of configuring a network so that key points are included. The agency should be able to reduce its own operating costs, while at the same time providing an early, guaranteed revenue stream to the service provider.

Given the tradeoffs between operating and capital expenses, the fixed cost of running a broadband system can be relatively low. The greatest value of an upfront contract to a system operator is its reliability, not necessarily the dollar amount involved.

It’s surprising how even small incentives – such as slightly lower costs, upfront contracts or small loans – can grab the attention of potential broadband operators and tip the balance in favor of a given locality. Sometimes, it’s just a matter of everyone speaking the same language.

Price points, service benchmarks and likelihood
to buy are key data for revenue projectionsLocal agencies and economic development organizations still have the job of attracting that investment. Instead of telling tales of dire need, they’ll be back to the business of encouraging business by documenting unmet demand and offering the right incentives to tip decisions in their direction.

I’ll have more to say about sweetening the pot later. The first job is to refocus on demand.

Need and demand are two very different things. Need is a general concept, and leans heavily on qualitative judgments. It’s a useful basis for public policy discussions, and marketers can use it to target services and products. Raw need, though, is not very helpful in making a core business case.

Demand is a precisely defined, quantitative, microeconomic metric. It’s usually the one big missing piece when service providers, and their investors, are evaluating a network build outside of their existing footprint.

Demographics, geography and existing infrastructure are important too, but the first two are freely available and most people who are active in the broadband investment space have a good enough idea of what’s already out there. The state broadband mapping projects funded by the federal stimulus program are likely to be game changers, and that makes it even better.

A good demand study, with estimates of take rates over a range of services and price points, leads to supportable revenue projections. When it comes to attracting an investor, a statistically valid and methodologically sound revenue projection is gold. It’s a lot easier to persuade someone to invest in a project that promises revenue. Investors aren’t interested in much else.

Going forward, public broadband funding will follow private capital. The two big remaining pots of public money belong to state universal service programs such as the California Advanced Services Fund and RUS, both of which require substantial private sector co-investment, sustainable business plans that are well documented and, where RUS is concerned, the ability to take on considerable debt.

Need motivates local governments and organizations to compete for private broadband investment. They’ll win when they can put demand on the table.

 Gold Country Connect provides prospective investors
 with broadband planning toolsBrent Smith, CEO of Sierra Economic Development Corporation, and Connie Stewart from Humboldt State University had success stories to tell. Three key lessons stood out:

1. Seek out motivated investors, including competitive local exchange carriers and independent Internet service providers, and find ways to improve their business cases and nudge them towards your goals. Don’t waste everyone’s time trying to bribe or bully them into accepting your plans or implementing your programs. A patchwork of operating networks beats a pristine concept with no takers, every time.

2. Do your homework and make sure it’s A-grade. Simple, quantitative market research that identifies market gaps and charts statistically valid demand at defined price points is pure gold to private sector investments analysts. A centralized broadband mapping project with service provider buy-in, like that run by Chico State University, puts the cards face up on the table and lets everyone get down to business without posturing and poor mouthing.

3. Subsidies help, but don’t necessarily need to be large. A guaranteed loan, a little local capital, even a tax break can tip the balance for a potential private sector broadband investor. When bigger subsidies are needed, the lion’s share of the risk can still fall on private investors. The California Advanced Services Fund will do a 40% match against private capital in underserved areas, and that’s been enough for hundreds of kilometers of fiber.

Unified community support is important, and creates a level of comfort that the project can be implemented. Leadership is needed to gain rights of way, permits and variances, and overcome bureaucratic inertia. Business analysts are more impressed by political muscle and professional, statistically valid research than they are by crayon drawings from a third grade class.

Real progress in other CETF-sponsored consortia has been hampered by a focus on community feel-good exercises and unworldly research. Evidently, Chico State’s mapping expertise is not matched by its economics department: someone there seems to think you can do a demand aggregation study without asking tiresome questions about price elasticity. The good thing about this kind of conference is that public sector decision makers get to see what works and what doesn’t, and can respond appropriately.

The last item on the conference agenda was the decision to come back for a fourth year. Expect to see a longer list of success stories.

It made sense, because that’s where the money was. NTIA and RUS made some dreams real in the first round last year, and are on track to fulfill a few more fantasies in the second round. But even though BTOP is reopening for what amounts to a stunted, public-safety focused third round, the good times are over and we have to return to the old normal.

It’s a world where the free money is mostly gone. Once the BTOP money is spent, NTIA goes back to being a small agency running small programs. In rural areas, RUS and state programs, like the California Advanced Services Fund (CASF), will provide grants and loans to organizations with a qualifying track record and, in some cases, enough cash to fund half or more of proposed projects themselves.

 Adelstein and RUS general
 field representative Harry Hutson showed
 CETF conference attendees in Redding
 how the first round BIP money went
 down the spoutRUS won’t fund projects that compete with their existing loan portfolio, however. Speaking to the California Emerging Technologies Fund’s third annual Rural Connections workshop in Redding this week, RUS administrator Jonathan Adelstein made it clear that the agency will give priority to organizations that it already funds, and won’t subsidize competing projects.

CASF expects it will continue to fund new broadband projects in California, but only in areas where AT&T, Verizon and the cable companies fail to upgrade infrastructure. A few arguable urban pockets aside, it’s the remote rural regions that have a shot.

Elsewhere, community broadband advocates will have to go back to the basics. Tried and true economic development strategies, like public-private partnerships, tax breaks and other incentives, and old fashioned salesmanship, will be effective. But only where public agencies and community advocates can present a focused and well documented business case and be flexible enough to accept that private capital comes with its own priorities.

The old normal is a world where subscriber metrics, return on investment and anchor tenants trump grand visions, sad stories and political grease. Painstaking determination and hard work count again, though. That’s a world worth calling home.

Like nearly every government agency in California, the City of Oakland was faced with increasing demand for public services and a decreasing budget. An evaluation was needed of the potential for wireless technology to make municipal staff more efficient and allow them to stay in the field longer, and to provide Internet service to residents, either directly in their homes and businesses or indirectly through community anchor institutions. This evaluation needed to focus specifically on Oakland’s diverse population, needs and terrain.

The City’s goals were:

• Enhance economic development by enabling businesses to operate more effectively and by making Oakland a more attractive place to live, work, and visit.
• Improve public safety by putting more police officers, fire fighters, inspectors and public works staff into the field, keeping them there longer and letting them work more efficiently.
• Increase the effectiveness of public, private, and nonprofit organizations through improved access to state of the art broadband wireless technology.
• Help overcome the digital divide.
• Improve the quality of life for all Oaklanders.

Tellus Venture Associates was brought in to do a comprehensive feasibility study that would include public focus groups, workshops and a town hall meeting, close coordination with City departments and outside agencies, and a technical survey that included radio frequency modeling over the hills, canyons, flatlands and waterways within the city limits.

When we analysed the research data, the trends that emerged tracked closely with the best practices we’ve developed during seven years of municipal and community broadband experience. The result was a more refined list of those principles:

1. No matter what the manufacturer says, the laws of physics still apply. No matter what the special interests say, sound business principles still apply. Don’t underestimate the public’s appreciation of physics and sound business principles, or overestimate its regard for manufacturers and special interests.
2. City-owned and operated metropolitan area networks are a cost effective means of extending information technology infrastructure and resources to local government facilities and employees.
3. Providing broadband connectivity to targeted community anchor institutions can be financially and technically feasible for cities, and is supported by public opinion.
4. Providing universal, consumer-grade wireless Interet access is not financially or technically feasible for cities, and is not supported by public opinion.
5. Cities can better promote digital inclusion by enabling and supporting a competitive broadband environment.
6. Widespread public awareness and support precedes deployment of a successful municipal broadband system.
7. Fiber optic and wireless technologies can be effective choices for network backbone segments, depending on capital and operating cost, timing, right-of-way, capacity and other considerations.
8. Fiber optic and other landline technologies provide orders of magnitude more bandwidth and many more years of useful service life, with lower operating costs.
9. Wireless technologies can be deployed faster and at much lower capital expense, and provide greater flexibility to change network topologies and service models to meet future needs.
10. Wireless technologies have the unique ability to support municipal staff in the field, particularly public safety personnel, but should only be deployed after an independent evaluation of technology, terrain and available spectrum.

With these principles in mind, we assessed the Oakland public’s needs and priorities, designed a reference architecture that could meet those needs, and developed a business model that quantified the benefits, demonstrated the value proposition and identified the money to pay for it all.

Our findings were:

• A point-to-point wireless broadband system serving specific community and institutional needs is financially and technically sustainable for the City of Oakland.
• The cost of building and operating such a system can be met through identifiable cost savings, efficiency gains and budgetary choices based on the economic value of the benefits produced.
• Public Internet access by way of community anchor institutions is financially and technically feasible, and universally supported by a diverse range of Oakland residents, organizations, agencies and businesses if it is implemented in a fiscally sound manner.
• Enabling entrepreneurial opportunities for local businesses on a pay-as-you-go, public-private partnership basis is also backed by Oakland stakeholders and supported by the financial and technical analysis conducted for this study.
• Providing wireless Internet service to residences or individual consumers is not financially sustainable or technically feasible for the City of Oakland, and is opposed by nearly all stakeholders, who cite the widespread technical and financial failure of such systems in other cities.

The next step was to secure the funding. Some of it came from the cost savings created by replacing a large number of low capacity, leased land lines with a comprehensive wireless backbone, comprised of high capacity point-to-point links using licensed spectrum. Some of it came from money budgeted for expensive cellular data service. In other cases, savings in man-hours and increased productivity, including more and better field audits by tax officers, offset operating costs.

Finding the money to pay for the capital expense was a different problem. Bonds were not an option, given the uncertainty of future budgets. Some of the funding could be raised locally, through public-private partnerships, but not all of it.

Fortunately, the conclusion of the study coincided with the establishment of the American Recovery and Reinvestment Act, also known as the federal economic stimulus program, which included $7.2 billion for broadband projects. With its emphasis on public safety, community anchor institutions and economic development, the broadband infrastructure plan created by Tellus Venture Associates for the City of Oakland was ideally suited to meet the program’s requirements.

The stimulus grant application had to wait until the second round of funding, because the first round emphasized rural projects and all but excluded urban areas from eligibility for broadband infrastructure funding. At the same time Google announced its own broadband grant program, which likewise tracked with the best practices we incorporated into the study. Both applications are now pending.

The final step will be to move ahead with construction of the system. Tellus Venture Associates prepared a draft Request for Proposal, which sets out the specifications for a municipal broadband system that would serve the City of Oakland. In some cases, such as providing broadband connectivity to public safety personnel in the field, the technology that would be employed is necessarily wireless. But in other cases, for example the core network backbone, wireless, fiber optic or other technologies are all possibilities. Those determinations, as well as any decision to release an RFP, will be made by City staff, once funding is secured.

Oakland Wireless Feasibility Study

Printable, high resolution version

City of Oakland staff report

Study presentation to Oakland City Council

City of Oakland wireless reference architecture

Oakland townhall meeting presentation

The stimulus bill gave RUS $2.5 billion and NTIA $4.7 billion for broadband project funding. In the first round, RUS said it would give out up to $2.4 billion. Now its saying it’ll give out a total $2.2 billion in the second round. The target budget is:

That leaves $300 million, which presumably goes to first round grants and, presumably, overhead. So far, RUS has only announced $54 million in first round grants. It still has first round applications in the due diligence stage of review, so any applicant that’s made it that far has a plausible hope of winning funding. The lion’s share of RUS’s money is shifting to the second round, so if you haven’t heard back about first round review yet, I suggest you start thinking about round two.

Unless you also put in a joint bid to NTIA. Including broadband mapping grants, NTIA allocated nearly $2 billion to first round projects. It’s allocating a total of $2.6 billion for the second round:

The two NTIA rounds match up pretty closely with the targeted totals. There’s $150 million unaccounted for, but that’s a believable overhead number for a federal operation.

The inference is that the two rounds will be processed, considered and funded separately. As it lays out now, if you have a first round NTIA application that’s disappeared into the process, it’s possible that you might yet advance to the due diligence stage. But that possibility diminishes as time goes on, particularly if NTIA sticks to its end-of-February target for closing out the first round and its 30-day due diligence period.

The second round workshops start next week, and more information should be available by then. My advice to first round applicants who haven’t heard from NTIA yet is to spend this week beginning to form the community alliances that it advocates so enthusiastically. It won’t be wasted effort, even if you slide into the first round under the wire.

 PlasticLogic promises and delivers

PlasticLogic QUE Pro Reader delivers newspapers, displays work documents, has PIM functions, wireless connectivity.

Screen 10.7 inches diagonal, unit 8.5×11 total, wafer thin, light as feather, at top of a crowded category.

Xyxio has breakout potential although it’s a headscratcher at first look, control a computer with your breath.

Xyxio is a technology company, offers means to create devices that are breath controlled and do the same thing as a mouse.

Can use to control GPS while driving, combine breath control with voice input, real potential for disabled people.

Xyxio isn’t a gamechanger but has potential to make a lot of things a little more useful in ways never considered.

Sanyo demoing electric bike, motor won’t run unless you pedal a bit, not much of a workout but a hell of a lot of fun.

 If Lance had one he’d still be with SherylZaggbox is a home media aggregator, also aggregates your gizmos, control all your boxes with one remote.

Siemens Gigaset turns your home phone system into a Bluetooth accessory for your mobile phone.

Mobile phone rings, answer it using your landline handset, no running around the house looking for the damn thing.

iMate is ruggedized GSM smartphone, works underwater, can run over it with a car, $700, not Mythbusters tested yet though.

 At least you’ll know where it isVu is showing a teeping platform costing $3,500 without monitor, really glorified video conferencing, nice stuff anyway.

FastPencil is online collaboration/coaching/publishing for would-be authors.

Big Brother, take 1: Tiwi is realtime GPS tracker for teen drivers, tells parents if they misbehave or go out of bounds.

Big Brother, take 2: Datecheck is web service powered by Internet snoop Intelius, “Look up before you hook up”.

PogoPlug lets you feed video content from a hard drive to a mobile phone, does transcoding into H.264 and Flash.

PogoPlug streams your video on Internet, managed via their portal, say they’ll shut you down if you violate their TOS.

Evolution Robotics showing a hardwood floor cleaning robot, costs $250, sorta mops up with a swiffer.

Very cool idea by Shapeways, upload a 3D diagram, they print out a 3D model of it and send it to you.

You can make toys, prototypes, rings, special items for events, cost goes from a few bucks to maybe $100.

Avermedia showing a gizmo that feeds video into a PC off air, then makes it available to you and your friends over the web.

Avermedia’s technology looks good but the service model is not lawyer-tested.

IFA presentation interesting, neat history, would make for a nice trip in September.

Fraunhofer up now talking about home telepresence.

It’s a wrap: another great Showstoppers, quality time with smart people showing interesting stuff, good food and drinks. Thanks!

 Secretary Gomez speaks to reporters
 at 2010 Consumer Electronics ShowShe repeated previous agency comments about wanting to “get it done fast, get it done right and with the greatest effect possible.”

She described the Broadband Technology Opportunities Program (BTOP) as “unprecedented” at the NTIA.

Lessons learned in a difficult first round would be applied in the second round. Among those lessons is a better understanding of what sort of projects should take priority for BTOP funding.

Her comments regarding the program’s time line were:

• The notice of funding availability (NOFA) for the second round will be released in a “few weeks”. She wouldn’t say if that means the previous target of mid-January would slip, although she left room for thinking it will.
• The first round grants will be completed “on a rolling basis over the next two months.”
• All grants will be made by Congress’ mandated deadline of 30 September 2010.
• In separate comments, Karen Jackson from the Commonwealth of Virginia’s Technology Office, confirmed that there will be at least a 60 day window for second round applications, rather than the original 45 day deadline in the first round.

I spoke with Secretary Gomez afterward about some of the nuances of the application review time line and progress to date. She couldn’t provide much else in the way of details, although the inference was that the first review stage for the first round BTOP (broadband technology opportunities program) applications is still ongoing, and that not all of the projects that will advance to the second, due diligence stage of review have been selected.

She did say “our goal is to make sure people know their status in time to file in the second round.” Asked whether first round applicants could be in the position of having to simultaneously prepare a second round application and follow up on a first round application, she said “hopefully not.”

Connecting the dots, here’s my take:

• The second round NOFA will be released around the end of January, maybe even as late as the first or second week of February.
• If a first round application hasn’t advanced to the second stage of review by the end of the month, it won’t.
• The second round NOFA will be more specific about program goals, be structured to encourage cooperation amongst applicants, and favor projects that include significant, shared middle mile infrastructure, with or without last mile facilities.
• NTIA has a much better understanding now of how to run the program and what its goals should be. Don’t be surprised if the first round falls significantly short of its $4 billion target, with unspent funds redirected to specific program goals in the second round.

Secretary Gomez also announced a new program, available at match.broadbandusa.gov, called Broadband Match. It’s an online tool that is supposed to “facilitate partnerships among prospective applicants for a grant.” She said the idea is to further NTIA head Larry Strickling’s goal for the next round of favoring public/private partnerships that take a “comprehensive view” of communities.

She said that they want to ensure that key community members – meaning anchor institutions and government agencies – can access middle mile projects directly and that private companies can make use of it to create last mile services that reach consumers and businesses.

The emphasis in the second round will clearly be on middle mile projects. Gomez spotlighted the grant made to such a project in Georgia last month as an excellent example of what they’ll be looking for in the second round. The objective of the Broadband Match program is to ensure that public/private groups “can put together the most comprehensive application possible.”

 Any table becomes a team work spaceKeyboards, mice and monitors are easily broken and awkward to arrange anywhere except a desk. Touchscreens and pads are all of that, as well as being expensive and hard to keep clean. But we’re used to it and anyway, it’s what computers are from a user’s perspective.

Not anymore.

The reference device is about the size of a paperback book and projects a 10-inch image onto a table. It senses the location and movement of your hands, and you can manipulate the image by brushing your fingers across the table top. You can select items, move them about, operate controls, even type on a virtual keyboard albeit slowly for now.

 Flip through a menu, wipe off the tableA computer – at least the bits humans directly use – can now be anywhere. You can page through a restaurant menu directly on the table. You can play a game, by yourself or with someone else, on an airline seat tray. You can project an ad layout or a circuit diagram onto a conference room table, allowing everyone to work on it together.

It can be permanently installed, as in a restaurant, or carried about, from room to room or in a briefcase.

Plans and directions can be seen and accessed wherever you’re actually doing something. Page through a recipe on a kitchen counter top, or expand a shop diagram while your head is under the hood of your car. Work on your computer wherever you, and your colleagues, happen to be.

Right now, the reference design puts Light Blue Optic’s holographic laser projector into a small unit with an ARM11 processor and 2 GB of solid state storage. It’s battery powered and has WiFi, Bluetooth and micro USB connectivity.

 Light Blue Optic’s first holographic laser
 projector reference productIt has a composite video input, a gravity sensor, a micro SD slot and a headphone jack. The projector output was set at 854 x 480 Wide VGA.

As productized, it’s a mobile accessory – it’ll take video input from a mobile phone – but that’s just a very small start.

The product was integrated by Foxconn, and is being offered as a reference design for the OEM market.

The company won’t talk about pricing or bill of materials cost. Right now, it’s probably very costly to make because the core holographic laser technology is not mass produced. Once production volumes ramp up, costs will plummet, to less than a large touchscreen in the near term and eventually to less than a keyboard and monitor.

This concept unit runs applications written in Adobe Flash Lite. There’s no software developer kit yet, the company says it will run applications written for any touchscreen. Maybe. In any event, this particular device is just a start. It’s the technology behind it that counts, and it can be integrated into any device, or no device at all. Network it to cloud computing resources and the computer – the physical object we know it as – disappears.

The revolutionary services, applications and products this technology enables haven’t been imagined yet. But in the not-too-distant future we won’t think of using computers in any other way.

 You’re welcomeSamsung is a major mobile phone and television manufacturer, with a mobile phone app store already serving subscribers in Europe and Korea. It connected the dots simply and elegantly. If you can run your calendar and tweet from your mobile phone, why not do it on your TV? If you’re watching a movie on your TV, why not walk away and keep watching it on your mobile phone?

The answer to both might be “because nobody wants to”. That’s fine, those are obvious applications that Samsung already has on the table. By creating app stores, with all credit to Apple for walking point, mobile phone companies created and proved out a business model that disrupted their own industry and will do the same to the television business.

Details are still thin, but Baxter said Samsung Apps, and the devices it supports, will be an open platform and that they will be releasing a software developer kit. They’ll start with free apps in the spring and add premium apps later this summer.

The next TV superstar will be the software developer who figures out what to do with a CPU-enabled television besides watch linear content. It doesn’t have to be a major Hollywood blockbuster. It almost certainly will be a high concept, low complexity application created by one or two independent devs that does something no one ever thought to do on a TV before.